The father and son authors of the new book “Blockchain Revolution” took to the stage this morning where Nasdaq opens and closes its market to discuss their latest work.
Kicking off a panel discussion with several industry leaders, Don Tapscott and Alex Tapscott took turns discussing how the management structure of some of those very same companies could be disrupted by distributed ledger technologies like blockchain.
The elder Tapscott set the stage for the conversation with a point-by-point explanation of why he believes blockchains can do to the management structure of companies what bitcoin and other applications are doing to value exchange.
Don Tapscott described the bigger-picture impact:
“This surely will have an impact on the firm.”
Coincidental timing
On the same day “Blockchain Revolution” hit stores, a distributed autonomous organization called TheDAO would also launch its crowdfunding campaign. Given the leaderless, autonomous nature of the project and the impressive capital it has raised, it was a topic of conversation at the day’s event.
According to Tapscott, the reason The DAO was created is because its structure provides the most efficient way for its creators to minimize transaction cost.
Citing Nobel prize-winning economist Ronald Coase, Tapscott argued that until now the structure that best facilitated that process was vertically integrated, which generally speaking means a leader overseeing other leaders who oversee entry-level employees.
But with smart-contract enabled management infrastructures, supporters of “The DAO” argue this structure can be flipped on its axis and managed horizontally.
As an example of the types of services that may one day be delivered under this management structure, Tapscott invoked the business models of some of today’s leading Silicon Valley startups.
Tapscott mentioned that blockchains could enable the creation of what he called a “super Uber” or “bAirbnb” (blockchain Airbnb).
He suggested the technology that powers The DAO could also reshape the music industry to the point where musicians “could they be fed first, and enable the labels to work on there behalf”.
Doubting DAOs
Overall, Tapscott expressed skepticism about the likelihood that The DAO’s fundraising round might be a fluke.
“Is this some kind of weird truth or is this some kind of harbinger of change for a rethinking of the firm?” he asked.
The DAO can be thought of as a tightly packed collection of smart contracts that help facilitate everything from taking on new voting members to the allocation of resources. While this is the first widely successful application of the technology, its core code is open-source, meaning anyone can copy it and try the model — or something similar — for his or herself.
Since The DAO exploded onto the blockchain scene earlier this month, many sceptics have come out to counter the support of investors.
Yesterday, FT Alphaville published an article about potential problems pertaining to token sales in exchange for voting rights that looks remarkably like an IPO. It also noted the long history of difficulties when one transfers “all day-to-day decision making to amateur committees”.
The author of “The Naked Corporation” and “Wikinomics” paraphrased Bob Dylan’s “Ballad of a Thin Man” to sum up the coincidence of the simultaneous launch of his book and The DAO.
Quoting a famous lyrical passage, he said:
“Something is happening here, but you don’t know what it is.”
Replacing Rube Goldberg
Don’s son and co-author of the book, Alex Tapscott, also talked about the impact of blockchain on traditionally problem-solving and its historically vertical structure.
The current financial services industry, he said, has a long history of solving problems top-down with new ideas tacked on top of other new ideas built on older new ideas.
Alex Tapscott described the problem to the financial industry:
“You end up in many aspects with this Rube Goldberg-style machine.”
By building solutions into an interlocking network of blockchains, Tapscott argued that financial innovators can create more resilient, less unwieldy solutions.
Book reception
The Tapscotts’ book has been largely well-received by members of the media. But it is also just one of several books to have been released on the subject over the past month.
William Mougyar’s “Business Blockchain” was published by Wiley on 9th May and Chris Skinner’s “ValueWeb” was published on 7th April.
At today’s event, the authors of “Blockchain Revolution” were introduced by Blythe Masters, CEO of Digital Asset Holdings, who talked about her skepticism toward some members of the media when she was first approached by the Tapscotts.
After realizing what Masters described as the “sheer scope” of the book, she agreed to participate.
Addressing an audience filled with industry insiders, Masters explained what she saw as the real books’ real value:
“Everybody knows enough to have been at least somewhat seriously confused.”
Image via Michael del Castillo for CoinDesk